United States District Court, S.D. New York
ADELFO GAVILAN GARCIA, CESAR GAYOSSO, GABRIEL TECUN, HAGEO CARDONA, LUIS FERNANDEZ ESCOBAR FLORES, MIGUEL ANGEL DIAZ GONZALEZ, and GENARO LOPEZ TEM, individually and on behalf of others similarly situated, Plaintiffs,
GOLDEN ABACUS INC. d/b/a BARKOGI, DANNY P. LOUIE, LAURA WONG, and ALBERT C. YUEN, Defendants.
MEMORANDUM OPINION AND
TAYLOR SWAIN United States District Judge.
Gavilan Garcia, Cesar Gayosso, Gabriel Tecun, Hageo Cardona,
Luis Fernandez Escobar Flores, Miguel Angel Diaz Gonzalez,
and Genaro Lopez Tem (collectively, “Plaintiffs”)
bring this action against Golden Abacus Inc. (d/b/a BarKogi)
(“BarKogi”), Danny P. Louie, Laura Wong, and
Albert C. Yuen (collectively, “Defendants”),
alleging violations of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201 et. seq.
and the New York Labor Law (“NYLL”), Articles 6
and 19. The Court has subject matter jurisdiction of this
action pursuant to 28 U.S.C. §§ 1331, 1367 and 29
U.S.C. § 201.
Defendants now move to compel arbitration of the instant
dispute and request that the Court dismiss Plaintiff's
complaint in its entirety. The Court has reviewed all
submissions carefully and, for the reasons below, denies the
are former employees of BarKogi. (Compl. ¶ 2.) On or
about their respective dates of hire, the Plaintiffs signed
documents including an arbitration agreement (the
“Agreement, ” Handbook at 33; see Pl.
Mem. at 4; Def. Mem. at 2). The Agreement provided, in
pertinent part, that the following types of disputes would be
submitted to arbitration: “[c]laims of unlawful
harassment or discrimination, ” “[c]laims of
unfair demotion or reduction in pay, ” and “[a]ny
claims of breach of contract or tort claims arising out of
[an employee's] employment or termination with the
Company, including, but not limited to, defamation,
intentional infliction of emotional distress, intentional
interference with contract, or right to privacy.”
(Handbook at 33).
August 5, 2016, Plaintiffs brought the instant action
alleging violations of Defendants' statutory obligations
during the course of Plaintiffs' employment. In
particular, Plaintiffs allege violations of the minimum wage
and overtime provisions of the FLSA and NYLL and violations
of the notice and recordkeeping, wage statement, and tip
withholding provisions of the NYLL. (Compl. ¶¶
192-209, 214-219, 223-226.) Plaintiffs further allege
violations of the spread of hours wage order of the New York
Commissioner of Labor and seek recovery of equipment costs
under the FLSA and NYLL. (Compl. ¶¶ 210-213,
November 22, 2016, Defendants moved to compel arbitration of
Plaintiffs' claims pursuant to the Agreement. Plaintiffs
oppose Defendants' motion and argue that the Agreement is
unenforceable on the grounds of unconscionability, and also
that the instant dispute is outside the scope of the
Federal Arbitration Act (“FAA”) provides that an
arbitration agreement “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C.S.
§ 2 (LexisNexis 2008). Enacted “[t]o overcome
judicial resistance to arbitration, [the FAA] embodies the
national policy favoring arbitration and places arbitration
agreements on equal footing with all other contracts.”
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440, 443 (2006).
“[a]rbitration is essentially contractual . . ., and
parties may not be forced into arbitration if that was not
their true agreement.” WorldCrisa Corp. v.
Armstrong, 129 F.3d 71, 74 (2d Cir. 1997). In deciding
whether to compel arbitration, a district court must
determine: “(1) whether the parties entered into an
agreement to arbitrate; (2) if so, the scope of that
agreement; (3) if federal statutory claims are asserted,
whether Congress intended those claims to be nonarbitrable;
and (4) if some, but not all, claims are subject to
arbitration, whether to stay the balance of the proceedings
pending arbitration.” Begonja v. Vornado Realty
Trust, 159 F.Supp.3d 402, 408-09 (S.D.N.Y. 2016) (citing
Guyden v. Aetna, Inc., 544 F.3d 376, 382 (2d Cir.
2008). “The threshold question of whether the parties
indeed agreed to arbitrate is determined by state contract
law principles.” Nicosia v. Amazon.com, Inc.,
834 F.3d 220, 229 (2d Cir. 2016).
deciding motions to compel, courts apply a standard similar
to that applicable for a motion for summary judgment.”
Id. (internal quotation marks omitted). That
standard “requires a court to consider all relevant,
admissible evidence submitted by the parties and contained in
pleadings, depositions, answers to interrogatories, and
admissions on file, together with . . . affidavits” and
to “draw all reasonable inferences in favor of the
non-moving party.” Id. (internal quotation
argue the instant action is within the scope of the Agreement
because Plaintiffs' claims may properly be characterized
as sounding in tort, or, in the alternative, as contract
claims or claims regarding an unfair reduction in pay.
(See Def. Mem. at 7-8; Def. Mem. in Reply to
Pls.' Opp. to Mot. to Compel Arbitration (“Def.
Reply Mem.”), Docket Entry No. 36, at 6-8). Defendants
have proffered no legal authority supporting their tort
characterization argument. Courts in this circuit have
routinely declined to apply tort principles to FLSA and NYLL
claims. See Xochimitl v. Pita Grill of Hell's
Kitchen, Inc., No. 14-CV-10234-JGK-JLC, 2016 WL 4704917,
at *12 (S.D.N.Y. Sept. 8, 2016), report and
recommendation adopted sub nom. Xochimitl v. Pita Grill of
Hell's Kitchen, Inc, No. 14 CIV. 10234 (JGK), 2016
WL 6879258 (S.D.N.Y. Nov. 21, 2016) (declining to apply tort
principles regarding the offset of damages to an FLSA or NYLL
claim); Chen v. Yuen, No. 04-CV-06579-GBD-KNF, 2015
WL 7758532, at *4 n.11 (S.D.N.Y. Dec. 1, 2015) (same).
Accordingly, the instant action cannot properly be
characterized as asserting “tort claims” within
the meaning of the arbitration provision.
characterization of the instant action as a claim for breach
of contract is similarly unpersuasive. Plaintiffs assert
violations of statutory obligations. “[A] plaintiff
cannot recover under a contract theory for a
defendant['s] failure to comply with existing
statutes.” Krichman v. J.P. Morgan Chase &
Co., No. 06-CV-15305, 2008 WL 5148769, at *3 (S.D.N.Y.
Dec. 8, 2008). An FLSA or NYLL claim asserts breach of a duty
that “is independent of any duty an employer might owe
his employee pursuant to an express or implied employment
contract; it arises by operation of law.” Byrne v.
C.I.R., 883 F.2d 211, 215 (3d Cir. 1989). Accordingly,
such claims are not “claims of breach of
contract” that are within the scope of the Agreement.
Plaintiffs' claims cannot be characterized as asserting a
“reduction in pay.” (Id. at 33.)
Defendants argue that, because Plaintiffs were provided with
a Notice of Pay Rate stating a rate in compliance with the
FLSA and NYLL, any payment below the statutory requirements
would constitute a “reduction.” (Def. Reply Mem.
at 7-8.) Plaintiffs' Sixth through Ninth Causes of Action
have nothing to do with Plaintiffs' pay rate, but rather
allege Defendants' failure to comply with notice and
recordkeeping requirements, failure to provide required wage
statements, failure to reimburse equipment costs, and
misappropriation of tips. (See Compl. ¶¶
214-226.) Plaintiffs' First through Fifth Causes of
Action allege failure to comply with minimum wage and
overtime laws. (See id. ¶¶ 192-213.)
Plaintiffs do not allege that Defendants reduced
Plaintiffs' pay, but ...